Exam 22: Frontiers of Microeconomics

Scenario 22-1 At issue in a particular city vote is how much to spend, per person, on city parks next year. Among the 10,000 voters, 1,000 prefer to spend $30 per person, but no more; 3,500 prefer to spend $45 per person, but no more; 2,500 prefer to spend $80 per person, but no more; and 3,000 prefer to spend $150 per person, but no more. -Refer to Scenario 22-1.If there is a vote on whether to spend $60 per person or $80 per person,the median voter will vote to spend

Which of the following would be an example of a principal trying to deal with a moral hazard problem?

The classic example of adverse selection is the market for used cars.

A community has five voters who are interested in only one issue: the government's spending on local parks. If Anthony would like the government to spend $12,000 on parks,Bob prefers $7,000, Carey prefers $4,000,Diane prefers $2,000,and Elaine prefers $0,how much spending would a politician seeking to win the election select when running against one opponent?

Robert borrowed some money from Granite Bank,telling the loan officer that he intended to use the money to make repairs to his home.After getting the loan,Robert and his girlfriend immediately took the money and headed to the nearest riverboat casino for a weekend of gambling and entertainment.

In a dictator game,player A must divide $100 between player A and player B.In this game,player B does not have the opportunity to reject an offer - they go home with whatever player A offers.Experiments have observed that when player A splits the $100,he or she consistently offers over $10 to player B.Which of the following comments fits best.

Which of the following events best exemplifies the concept of signaling?

Which of the following relationships involves asymmetric information?

If preferences exhibit the property of transitivity,then

Which of the following relationships involves asymmetric information?

Employers may choose to pay their workers a wage that exceeds the equilibrium wage according to what are called

Asymmetric information is a problem that

The Latin term caveat emptor,meaning "let the buyer beware," brings to mind the problem of

Employers can try to overcome the moral-hazard problem involving their employees by

Economist Kenneth Arrow wrote a famous book in 1951 in which he took up the question,

The fact that someone with a high risk of medical problems is likely to buy a large amount of health insurance is an example of

Steve is planning to sell his home.In preparation for the sale,he paints all of the ceilings in his house to cover up water stains from his leaking roof so that potential buyers will be unaware of this problem.This is an example of

A person who makes decisions that are "merely good enough" is called a(n)

Evidence points to the fact that,in the real world,people appear to care about fairness